Financial Accounting Exam 1 All Questions And Verified Detailed
Answers A+ Graded 100% Pass Guaranteed
Balance Sheet - ANSWER the financial statement that reports assets, liabilities and
owner's equity at a particular point in time.
Income Statement - ANSWER a financial statement that presents revenues and
expenses for fiscal period. Revenues - expenses = net income
Income Summary Account - ANSWER the account used to accumulate and summarize
revenues and expenses for the period.
Trial Balance - ANSWER a listing of accounts and their balances at a point in time
Statement of Cash Flows - ANSWER A financial statement that presents financial
information about the cash receipts and cash payments of a business during a specific
period of time.
permanent accounts - ANSWER all accounts that appear in the balance sheet; account
balances are carried forward from one period to the next
temporary accounts - ANS Revenue, expense, and dividend accounts whose balances a
company transfers to Retained Earnings at the end of an accounting period.
Business entity assumption - ANS A business is accounted for separately from other
business entities, including its owner.
Time period assumption - ANS Assumption that an organization's activities can be
divided into specific time periods such as months, quarters, or years.
,Revenue recognition principle - ANSWER The principle that companies recognize
revenue in the accounting period in which the performance obligation is satisfied.
Going Concern Assumption - ANSWER The assumption that the company will continue in
operation for the foreseeable future.
Asset Accounts - ANSWER You own, examples include: cash, accounts receivable,
notes receivable, prepaid accounts, supplies, equipment, buildings, land
Shareholders equity accounts - ANSWER Assets - common stock and retained earnings
Closing entries - ANSWER Entries that transfer the balances of all temporary accounts
(revenues, expenses, and dividends) to the balance of the Retained Earnings account
Adjusting entries - ANSWER journal entries recorded to update general ledger accounts
at the end of a fiscal period
Monetary unit assumption - ANSWER An assumption that requires that only those things
that can be expressed in money are included in the accounting records.
Measurement (cost) principle - ANSWER Accounting information is based on actual
cost. Actual cost is considered objective.
Corporation - ANSWER A business owned by stockholders who share in its profits but
are not personally responsible for its debts
proprietorship - ANSWER an organization owned and operated by an individual
,limited liability company - ANSWER A business entity in which the business itself (not the
owner) assumes liability for the company's debt
Partnership - ANSWER a business organization owned by two or more individuals who
agree on a specific division of responsibilities and profit
FASB - ANSWER Financial Accounting Standards Board, is the private sector body
given the primary responsibility to work out the detailed rules that become GAAP.
IASB - ANSWER International Accounting Standards Board --- sets accounting
standards in the rest of the world.
Securities and Exchange Commission (SEC) - ANSWER The agency of the U.S.
government that oversees U.S. financial markets and accounting standard-setting
bodies.
GAAP - ANS Commonly referred to as Generally Accepted Accounting Principles. The
rules and boundaries that accountants follow when reporting and recording financial
events.
Unearned Revenue - ANS A liability created when the business receives cash from
customers in advance of performing services or delivering goods.
prepaid expenses - ANS expenses paid in cash in advance of being used or consumed
accumulated depreciation - ANS A contra asset account that reflects the total amount of
depreciation taken to date.
Balance Column Account - ANSWER An account that contains both debit and credit
columns for the purpose of recording entries and also has a column to show the balance
of the account after each entry.
, Double entry accounting - ANSWER A system of recording the debit and credit parts of
transaction
T account - ANSWER Tool used to show the effects of transactions and events on
individual accounts; shaped in the form of a T. Debits on the left side and Credits on the
right.
Accrual basis accounting - ANSWER reporting income when it is earned and expenses
when they are incurred
Cash basis accounting - ANSWER Reporting income when the cash is received and
expenses when the cash is paid.
common stock - ANSWER the term for the total amount contributed by stockholders for
the shares that they purchase.
Managerial Accounting - ANSWER accounting used to provide information and analyses
to managers inside the organization to assist them in decision making
Expense Recognition Principle - ANSWER match expenses with revenues in the period
when the company makes efforts to generate those revenues
Full Disclosure Principle - ANSWER Accounting principle that dictates that companies
disclose circumstances and events that make a difference to financial statement users.
IFRS - ANSWER International Financial Reporting Standards A standardized set of rules
and practices in business accounting used in many countries as an alternative to US
GAAP.
Statement of Retained Earnings - ANSWER Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Easton. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $24.99. You're not tied to anything after your purchase.
